Scott Brown's problems with FinReg

As you've heard by now, the financial regulation bill is in trouble. Robert Byrd's death changed the vote calculus in the Senate (the second time this has happened to Harry Reid and Barack Obama during the end game of a major reform effort) and Scott Brown, who voted for the Senate version of the bill, has decided to oppose the conference report. But it's worth explaining why.

The conference committee was conducted with an eye toward securing Brown's vote. In particular, Brown wanted to see a rule inserted that allowed banks to continue using up to 3 percent of their core capital to invest in hedge funds and private equity firms. He got it. A lot of people opposed this provision, as they thought banks should be out of the hedge fund business. But Brown's vote was considered crucial.

Quite late in the committee's negotiations, the Congressional Budget Office examined the near-final version of their bill and said that the bill contained about $19 billion in likely costs to taxpayers over time, and so under pay-go laws, that cost would have to be offset. Barney Frank inserted a tax on large banks and hedge funds to cover the cost. And this is what Brown opposes: A tax on banks to pay for the cost of a bill that regulates banks. "If the final version of this bill contains these higher taxes," Brown wrote, "I will not support it." Brown believes, not without merit, that banks and hedge funds will pass that tax onto their customers.

Instead, Brown is insisting that the committee find $19 billion in spending cuts to support the legislation. So the banks are getting a new regulatory structure meant to prevent another round of chaotic failures, but Brown doesn't think they should have to pay for it. Instead, other programs and services should be cut. So taken together, Brown's final demand have been that the bill allows banks to continue owning hedge funds and that banks don't have to pay for the costs of the re-regulation effort. Maybe the tea partyers are more pro-bank than I'd thought?

I'm so conflicted. Scott Brown is wrong (banks should be out of the hedge fund business). As far as taxing the banks, I think he's probably wrong on that, too, but I do wonder what in the bill is costing $19 billion dollars.

At the same time, I love the fact that Scott Brown as his truck won that seat. Awesome.

CBO’s estimate of the cost of the resolution authorities provided under the act represents the difference between the expected values of spending by the OLF to resolve insolvent firms and assessments collected by the OLF. Those expected values represent a weighted average of various scenarios regarding the potential frequency and magnitude of systemic financial problems Although the estimate reflects CBO’s best judgment on the basis of historical experience, the cost of the program would depend on future economic and
financial events that are inherently unpredictable.

So infact, Scott Brown is holding up all of financial reform because of a hypothetical increase of the deficit by < 1 billion/yr.

To me this is worse than being a Republican who opposes the core of the legislation.

Ezra, please explain once again, for those of us who remain eternally confused by the rules of the Senate, why those in opposition to this bill are not required to actually filibuster the cloture vote. This 60 vote standard for passing any legislation at all is beyond ridiculous.

pat3walters, Senators aren't usually made to filibuster because under current rules the filibustering party only needs to maintain a small number of senators (possibly only one) to keep the filibuster going but the majority party needs to keep almost all of their members there to maintain a quorum so that the debate keeps going and the filibustering party doesn't get a break.

Also, actually seeing a filibuster through to its end takes the entire of the Senate's calendar, which means they're not doing other important things, like, say, confirming Supreme Court nominees.

Unbelievable - our country is run like a super giant third world country. Instead of a few powerful families we now have a few shameless banks and their paid Washington toadies controlling everything and no one call pull a working alarm bell.